ASTROCOM CORPORATION
2700 Summer Street NE
Minneapolis, Minnesota 55413
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
May 28, 1998
TO THE SHAREHOLDERS OF ASTROCOM CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Astrocom Corporation (the "Company"), a Minnesota corporation, will be held on
Thursday, May 28, 1998, at 3:00 p.m., Central Daylight Time, at the Minneapolis
Club, 729 Second Avenue South, Minneapolis, Minnesota, for the following
purposes:
1. To elect one Class II director of the Company to serve until the
annual meeting of shareholders in 2001.
2. To consider and act upon a proposal to approve the Company's 1998
Stock Option Plan.
3. To act upon such other matters as may properly come before the meeting
or any adjournments thereof.
Pursuant to the Restated Bylaws of the Company, the Board of Directors has
fixed the close of business on April 10, 1998, as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. The stock transfer books of the
Company will not be closed.
Each of you is invited and urged to attend the Annual Meeting in person, if
possible. Whether or not you are able to attend in person, you are requested to
mark, date, sign and return promptly the enclosed proxy in the envelope enclosed
for your convenience.
April 24, 1998.
Ronald B. Thomas
President and Chief
Executive Officer
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ASTROCOM CORPORATION
2700 Summer Street NE
Minneapolis, Minnesota 55413
PROXY STATEMENT
For Annual Meeting of Shareholders of
ASTROCOM CORPORATION
to be held May 28, 1998
RIGHT TO REVOKE PROXY
AND
VOTING AT THE MEETING
Any shareholder of Astrocom Corporation (the "Company") giving the proxy
enclosed with this Proxy Statement may revoke the proxy at any time prior to its
exercise by filing a duly executed proxy bearing a later date with the Secretary
of the Company or by giving written notice to the Secretary of the Company at or
before the time of the meeting. After revoking the proxy, the shareholder may
vote his or her stock in person.
The persons named in the enclosed proxy intend to vote at the meeting in
compliance with the instructions on all proxies submitted by shareholders. If
no specification is made, the shares will be voted FOR the election of Gary L.
Deaner, the nominee for director, and FOR the approval of the 1998 Stock Option
Plan of Astrocom Corporation.
BY WHOM AND THE MANNER IN WHICH THE
PROXY IS BEING SOLICITED
The proxy is solicited by and on behalf of the Board of Directors of the
Company. The expense of the solicitation of proxies for this Annual Meeting,
including the cost of mailing, has been or will be borne by the Company. The
approximate date on which this Proxy Statement and the proxy will first
be sent or given to shareholders is April 24, 1998.
Arrangements may be made with brokerage houses and other custodian nominees
and fiduciaries to send proxies and proxy materials to their principals, and the
Company will reimburse them for their expense in doing so.
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DIRECTORS AND EXECUTIVE OFFICERS
Election of Directors
The Company's Restated Articles of Incorporation provide that the Board of
Directors shall consist of not less than three nor more than fifteen members, as
determined from time to time by the Board of Directors, divided into three
classes as nearly equal in size as possible.
The term of each class of directors is three years, and the term of one
class expires each year in rotation. At the 1997 Annual Meeting, Raymond F.
Good and Douglas M. Pihl were elected as Class I directors for terms expiring in
2000. Effective June 10, 1997, Mr. Good resigned as a director. On June 26,
1997, the remaining directors elected Ronald B. Thomas as a Class I director to
fill the unexpired term of Mr. Good. Effective April 6, 1998, Dennis E. Evans
resigned as a director. The directors have not elected a replacement for Mr.
Evans, and it is anticipated that a replacement will be elected to fill the
unexpired term of Mr. Evans at some time after the annual meeting.
The term of Roger V. Stageberg, the sole Class II director, will expire at
this Annual Meeting. The Board of Directors has nominated Gary L. Deaner for
election as a Class II director, to serve for a term of three years, expiring at
the Annual Meeting of shareholders in 2001. Unless otherwise instructed by the
shareholder, the persons named in the enclosed proxy intend to vote for the
election of Gary L. Deaner as a director. In the event Mr. Deaner for any
reason should not be available as a candidate for director, votes will be cast
pursuant to authority granted by the enclosed proxy for such other candidate as
may be nominated by the Board of Directors. Management knows of no reason to
anticipate that Mr. Deaner will not be a candidate, having consented to be named
and to serve if elected.
The following table sets forth the name and age of each director of the
Company (except Roger V. Stageberg, whose term of office as a director will
expire at the Annual Meeting) and nominee as a director of the Company, his
principal occupation and business experience for the past five years, the
year in which he became a director of the Company, the number of shares of
common stock of the Company which he reported were beneficially owned by him on
April 10, 1998, and the percentage of all outstanding shares of common stock
owned by him:
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Principal Occupation, Common
Business Experience Shares
for Past Five Years Benefi- Percent
and Other Director cially of Out-
Name and Age Directorships Since Owned Standing(1)
Class I Directors
Whose Terms
Expire in 2000
Ronald B. Thomas President, Chief Executive 1997 3,002,382(2) 22.29%
(54) Officer, Secretary and
Treasurer of the Company;
private investor, 1987-1997;
Director of Ciprico, Inc.,
since 1978
Douglas M. Pihl Chairman and CEO of Vital 1997 23,750(3) *
(58) Images, Inc., a publicly
held provider of software
for the medical industry,
since 2/98; Technical Advisor
to Ascend Communications,
Inc., 1996-1997; President
and Chief Executive Officer
of NetStar, Inc., 1991-1996;
Director of Vital Images,
Inc. and Destron-Fearing
Corporation
Nominee as
Class II Director
Whose Term
Expires in 2001
Gary L. Deaner Vice President of Marketing -- 0 --
(58) and Strategic Planning of
J. River, Inc., a developer
of communications and
security software, since
9/96; employed by Digi
International from 10/85-8/96;
Director of Ciprico, Inc.,
since 1995
* Less than one percent
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Principal Occupation, Common
Business Experience Shares
for Past Five Years Benefi- Percent
and Other Director cially of Out-
Name and Age Directorships Since Owned Standing(1)
Class III Director
Whose Term
Expires in 1999
S. Albert D. HanserChairman of the Board of 1991 2,779,975(4) 24.34%
(60) the Company; Chairman
of Hanrow Financial
Group, Ltd., a merchant
banking firm, since 1989
All Directors and
Officers as a Group 5,806,107 40.43%
(5 persons) (2)(3)(4)
(1) Each figure showing the percentage of outstanding shares owned
beneficially has been calculated by treating as outstanding and owned the shares
which would be issuable within 60 days if stock options and/or warrants held by
the indicated person or group of persons were exercised.
(2) Includes 2,929,903 shares which would be issuable within 60 days if
warrants held by Mr. Thomas were exercised. See "Thomas Warrants" and
"Subordinated Convertible Promissory Notes."
(3) Includes 10,000 shares which would be issuable within 60 days if a
stock option held by Mr. Pihl were exercised.
(4) Includes 1,389,878 shares held by Hanrow Capital Fund Five, a
Minnesota limited partnership, 117,600 shares held by Hanrow Capital Fund, a
Minnesota limited partnership, and 175,000 shares held by Hanrow Financial
Group, Ltd. Also includes shares that Hanrow Financial Group, Ltd., Hanrow
Capital Fund X and Hanrow Business Finance have the right to acquire pursuant to
the terms of warrants issued to them. See "Hanrow Warrants." Does not include
200,000 shares of convertible preferred stock held by Hanrow Financial Group,
Ltd. or shares which Hanrow Financial Group, Ltd. could receive upon conversion
of a Subordinated Convertible Promissory Note dated August 28, 1997. See
"Subordinated Convertible Promissory Notes." Mr. Hanser is Chairman director
and a shareholder of Hanrow Financial Group, Ltd., the general partner of Hanrow
Capital Fund, Hanrow Capital Fund Five and Hanrow Capital Fund X. Although Mr.
Hanser may be deemed to be the beneficial owner of the foregoing shares, he
disclaims voting and dispositive powers over all of said shares.
Also includes 60,000 shares held by the Custodian of Mr. Hanser's IRA
and 314,500 shares which would be issuable within 60 days if stock options
and/or warrants held by Mr. Hanser were exercised.
Each of the persons named in the foregoing table, except Gary L. Deaner, is
now a director of the Company and has continuously served as a director of the
Company since the year indicated.
During 1997, there were 11 meetings of the Board of Directors. Mr. Hanser,
Mr. Evans and Mr. Stageberg were present at all of the meetings. Mr. Pihl and
Mr. Thomas were each present at all of the meetings held after they were elected
directors. The Company's Audit Committee met once during 1997. The Company's
Compensation Committee and standing Nominating Committee (consisting of those
directors whose terms as directors do not expire at the next scheduled meeting
of the shareholders) did not meet during 1997.
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On December 13, 1995, the Board of Directors adopted the 1995 Non-Employee
Directors' Equity Compensation Plan which provided for payment of directors'
fees for services rendered during 1995, 1996 and 1997 by non-employee directors
in common stock of the Company. The shareholders approved the Plan at the 1996
Annual Meeting. On December 15, 1997, the three current non-employee directors
of the Company were each entitled to receive shares of common stock in payment
of directors' fees for services rendered during 1997 pursuant to the Plan. Mr.
Evans and Mr. Stageberg each received 15,000 shares, and Mr. Pihl received
13,750 shares.
The Company's 1998 Stock Option Plan provides that each non-employee member
elected to the Board, and each employee member of the Board who later becomes a
non-employee member of the Board, will automatically be granted a non-qualified
option for 10,000 shares at 100% of fair market value. If the 1988 Plan is
approved by the shareholders, and Mr. Deaner is elected a director, Mr.
Deaner will be granted a non-qualified option for 10,000 shares on May 28, 1998.
The Company's 1998 Stock Option Plan also provides that each non-employee
director, serving as of the beginning of each calendar year, shall automatically
be granted a non-qualified option to purchase 20,000 shares at 100% of fair
market value on the date of grant for his or her services to the Company. Such
non-qualified options vest as to 1/12th of the 20,000 shares at the end of each
calendar month during the year following the grant of the non-qualified option.
Executive Officers
Officer
Name and Age Office With the Company Since
S. Albert D. Hanser (60) Chairman of the Board and 1992
Director
Ronald B. Thomas (54) President, Chief Executive Officer 1997
Secretary, Treasurer and Director
Sarah B. Fjelstul (30) Assistant Secretary 1997
Mr. Hanser joined the Company as a director in 1991 and was elected
Chairman of the Board on March 30, 1992. He was elected interim President and
Chief Executive Officer on September 10, 1992, and was elected President and
Chief Executive Officer on December 17, 1992. He resigned as President on
May 23, 1996, and resigned as Chief Executive Officer on June 26, 1997.
Mr. Hanser has been employed as Chairman of Hanrow Financial Group, Ltd., a
merchant banking firm, since 1989.
Mr. Thomas joined the Company in 1997. He was elected a director on June
26, 1997, Chief Executive Officer effective June 27, 1997, President effective
June 30, 1997 and Secretary and Treasurer on October 13, 1997. From 1987 to
1997, Mr. Thomas was a private investor.
Ms. Fjelstul joined the Company as controller in June 1997, and was elected
Assistant Secretary on October 22, 1997. Ms. Fjelstul was employed by B-Tree
Systems, Inc. from 1992 to 1997.
SUMMARY COMPENSATION TABLE
The following table contains certain information regarding the compensation
paid by the Company during the three year period January 1, 1995, through
December 31, 1997, to the Company's Chief Executive Officer. No executive
officer of the Company received compensation in excess of $100,000 in 1997.
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Annual Compensation (1)
(a) (b) (c) (d) (e) (f)
Other Securities
Annual Under-
Name and Compen- lying
Principal sation Options
Position Year Salary($) Bonus($) ($) (#)
S. Albert D. Hanser 1997 53,076.91 0 0 0(4)
Chairman of the 1996 95,192.11 30,000 0 0(4)
Board and Director(2) 1995 119,475.00 0 0 214,500(4)
Ronald B. Thomas, 1997 50,576.87 0 0 0(5)
President, Chief
Executive Officer,
Secretary, Treasurer
and Director(3)
(1) Does not include any amounts paid under the Company's group medical
and hospitalization plan which is available generally to all employees. Does not
include the value of certain noncash compensation or benefits made available to
executive officers, which were less than amounts required to be reported
pursuant to applicable SEC regulations.
(2) Mr. Hanser resigned as Chief Executive Officer effective June 26,
1997.
(3) Mr. Thomas joined the Company in 1997 and was elected Chief Executive
Officer effective June 27, 1997, President effective June 30, 1997 and
Secretary and Treasurer on October 13, 1997.
(4) Does not include warrants granted to Hanrow Financial Group, Ltd.,
Hanrow Capital Fund X or Hanrow Business Finance. See "Hanrow Warrants."
(5) Does not include warrants granted to Mr. Thomas. See "Thomas
Warrants."
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1988 STOCK OPTION PLAN
In 1988 the shareholders approved the 1988 Stock Option Plan (the "1988
Plan") of the Company. The 1988 Plan allows the Company to grant both incentive
stock options and non-qualified options. Under the terms of such Plan, no
options could be granted after February 21, 1998.
The 1988 Plan is administered by the Stock Option Committee of the Board of
Directors of the Company which has full authority and discretion to select
participants, determine the times at which options shall be granted, set the
period and the terms and conditions under which each option becomes
exercisable (as limited by the 1988 Plan), and make any other determinations
which it believes necessary or advisable for the administration of the 1988
Plan. Incentive stock options may only be granted to any full-time or part-time
employee (which term includes, but is not limited to, officers and directors who
are also employees) of the Company or of its present and future subsidiary
corporations. Non-qualified options may be granted to other persons, including,
but not limited to, members of the Board of Directors, consultants or
independent contractors providing services to the Company, or its present and
future subsidiary corporations. No optionee may receive incentive stock
options exercisable for the first time during any calendar year having an
aggregate fair market value (determined as of the time the option is granted)
in excess of $100,000.
Each non-employee member of the Board of Directors first elected to the
Board after approval of the 1988 Plan by the shareholders, and each employee
member of the Board who became a non-employee member of the Board after said
date, was automatically granted a non-qualified option for 10,000 shares at 100%
of fair market value. Non-employee members of the Board were not otherwise
eligible to participate in the 1988 Plan.
The exercise price of incentive stock options may not be less than the fair
market value of the shares on the date of the grant, but if the optionee owns
more than 10% of the total combined voting power of the outstanding stock of the
Company, the exercise price may not be less than 110% of the fair market value
of the shares on the date of grant. The exercise price of non-qualified options
may not be less than 85% of the fair market value of the shares on the date of
grant. All options are nontransferable. Incentive stock options are
exercisable only while the optionee is an employee (or for 90 days after
termination, if due to age or disability), or within one year after death, if
death occurs while the optionee is an employee. The term of options granted
under the 1988 Plan cannot exceed 10 years from the date of grant, or five years
from the date of grant of an incentive stock option if the optionee owns more
than 10% of the total combined voting power of all outstanding stock.
The 1988 Plan, as amended, currently provides for the issuance of 2,000,000
shares of common stock. As of April 10, 1998, 314,125 shares had been purchased
pursuant to the exercise of options granted under the 1988 Plan. Options to
purchase an aggregate 743,500 shares are outstanding under the 1988 Plan and
expire at varying times between June 13, 1998, and January 29, 2003. As of
April 10, 1998, options to purchase an aggregate 65,000 shares had been granted
to employees in 1998.
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The following table provides information on option grants in 1997 to the
named executive officers.
Individual Grants in 1997
Number of % of Total Exercise
Securities Options Price
Underlying Granted to Per
Options Employees Share Expiration
Name Granted(1) in 1997 ($)(1) Date
S. Albert D. Hanser 0 -- -- --
Ronald B. Thomas 0 -- -- --
Sarah B. Fjelstul 25,000 8.65% $.47 07/02/02
15,000 5.19% $.63 07/31/02
(1) The exercise price is the fair market value of the Company's stock on
the date of grant. The above options are exercisable one-fourth on the first
anniversary of the date of grant and one-fourth each year thereafter.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on the number and value of the
unexercised options held by the named executive officers at year-end. No
executive officers exercised options to purchase shares in 1997.
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options at Options at
Dec. 31, 1997 (#) Dec. 31, 1997 ($)
Exercisable* Exercisable*
Name Unexercisable** Unexercisable**(1)
S. Albert D. Hanser 260,875* $43,478.75*
53,625** $4,826.25**
Ronald B. Thomas 0 0
Sarah B. Fjelstul 40,000** $3,000.00**
(1) The amounts given are based on the average of the bid and ask prices
of the Company's common stock on December 31, 1997 which was $.59. The average
of the bid and ask prices on April 10, 1998, was $.59.
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HANROW WARRANTS
S. Albert D. Hanser, Chairman of the Company, is Chairman, director and a
shareholder of Hanrow Financial Group, Ltd., the general partner of Hanrow
Capital Fund, Hanrow Capital Fund Five and Hanrow Capital Fund X. The Company
has issued the following warrants to such entities:
Warrant No. of $ Per Expiration
Date Name Shares Share Date
04/05/91 Hanrow Financial Group, Ltd. 180,000 $1.00 04/05/99
06/16/93 Hanrow Financial Group, Ltd. 50,000 $ .30 06/16/98
12/22/94 Hanrow Capital Fund X 131,570 $ .50 12/31/99
03/15/95 Hanrow Capital Fund X 70,000 $ .50 12/31/99
08/28/97 Hanrow Financial Group, Ltd. 37,500 $ .50 07/31/02
On August 1, 1996, and September 1, 1996, the Company issued Warrants
entitling Hanrow Business Finance to purchase an aggregate 75,000 shares of the
Company's common stock, at a price of $1.50 per share, during the period from
the date of the Warrant to August 1, 2001 and September 1, 2001, respectively.
Hanrow Business Finance is a subsidiary of Hanrow Financial Group, Ltd.
THOMAS WARRANTS
Effective July 2, 1997, the Company issued a warrant entitling Ronald B.
Thomas to purchase 2,892,403 shares of the Company's common stock, at a price of
$.47 per share. The right to purchase the shares may be exercised at any time
through July 1, 2007.
In connection with a loan made to the Company by Mr. Thomas, on August 28,
1997, the Company issued a warrant entitling Mr. Thomas to purchase 37,500
shares of the Company's common stock, at a price of $.50 per share. The warrant
is exercisable through July 31, 2002.
SUBORDINATED CONVERTIBLE PROMISSORY NOTES
In 1997, the Company borrowed $510,000 through issuance of Subordinated
Convertible Promissory Notes and warrants to purchase shares of common stock.
The Notes bear interest at a rate of 12%, payable at maturity on July 31, 1998.
The Notes are convertible into common stock of the Company at a conversion price
per share equal to 80% of the average of the bid and asked prices for one share
of common stock at the close of business on the day preceding the date of
conversion. The following principal shareholders loaned the indicated amounts
to the Company in 1997:
Name Amount
Hanrow Financial Group, Ltd. $25,000
Ronald B. Thomas $25,000
H.L. Severance, Inc. Pension Plan $ 4,000
H.L. Severance, Inc. Profit Sharing Plan and Trust $ 8,000
Richard W. Perkins, Trustee $50,000
In January 1998, Mr. Thomas converted his Note into common stock of the
Company.
RETIREMENT SAVINGS PLAN
The Company provides for eligible employees an Employee Retirement Savings
Plan (the "401(k) Plan") under Section 401(k) of the Internal Revenue Code, as
amended. The 401(k) Plan was effective December 1, 1986, and was restated in its
entirety effective April 1, 1994. The 401(k) Plan provides that eligible
employees may make earnings reduction contributions, on a pre-tax basis, to the
401(k) Plan. Eligible employees are allowed to defer up to 10% of their
earnings each year (up to the federal maximum limit). Employee contributions
are currently invested in an equity fund, a fixed income fund, a principal
protection fund or a money market fund, at the election of the participant. A
participant will be cashed out of the 401(k) Plan upon termination of
employment. All full-time employees over the age of 21 who have completed six
months of employment are eligible to participate. As of April 10, 1998, 9
employees (out of a total of approximately 11 eligible employees) were
participating in the 401(k) Plan.
The 401(k) Plan also provides that the Company may make a discretionary
matching contribution, in cash or common stock of the Company, of from 0% to 25%
of the contribution of each employee electing to participate in the 401(k)
Plan. The Company did not make a matching contribution to the 401(k) Plan in
1997.
NON-EMPLOYEE DIRECTORS' EQUITY COMPENSATION PLAN
In 1996 the shareholders approved the 1995 Astrocom Corporation
Non-Employee Directors' Equity Compensation Plan (the "1995 Plan"). The 1995
Plan provided for the payment of directors' fees payable for services rendered
during the calendar years 1995, 1996 and 1997 by non-employee directors of the
Company in common stock. The Plan terminated on December 13, 1997.
The 1995 Plan provided that only directors of the Company who were not also
employees and who served as a director at any time during 1995, 1996 and 1997
were covered by the 1995 Plan. Commencing December 15, 1995, and on December 15
of each year thereafter during the term of the 1995 Plan, a director serving all
12 months of a calendar year was entitled to receive 15,000 shares of common
stock in payment of director's fees for that year. To the extent that a
director dies, resigns, is not reelected or otherwise fails to serve for all 12
months of the calendar year, the number of shares of common stock issued and
delivered to such director was to be pro rated based upon the number of actual
months served during the calendar year. Three of the directors participated in
the 1995 Plan during 1997.
On December 15, 1997, the three non-employee directors of the Company who
served during calendar year 1997 were entitled to receive the following shares:
Name Number of Shares 12/15/97 Value
Dennis E. Evans 15,000 $11,250
Roger V. Stageberg 15,000 $11,250
Douglas M. Pihl 13,750 $10,312
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PRINCIPAL HOLDERS OF COMMON SHARES
As of April 10, 1998, there were 10,538,180 shares of the Company's common
stock outstanding. Each outstanding share entitles the holder thereof to one
vote. The following table sets forth information as of April 10, 1998, with
respect to any person who is known to the Company to be the beneficial owner of
more than 5% of the Company's outstanding common stock:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership Of Class(7)
Dennis E. Evans 2,375,698(1) 21.44%
700 TCF Tower
Minneapolis, MN 55402
Hanrow Capital Fund Five, 1,389,878 13.19%
a Minnesota limited
partnership
700 TCF Tower
Minneapolis, MN 55402
S. Albert D. Hanser 2,779,975(2) 24.34%
700 TCF Tower
Minneapolis, MN 55402
Perkins Capital Management 1,405,500(3) 13.34%
730 East Lake Street
Wayzata, MN 55391
Richard W. Perkins,
as Trustee 619,400(4) 5.84%
730 East Lake Street
Wayzata, MN 55391
H. Leigh Severance 595,600(5) 5.35%
100 Fillmore Street
Denver, CO 80206
Ronald B. Thomas 3,002,382(6) 22.29%
2700 Summer Street NE
Minneapolis, MN 55413
(1) Includes 1,389,878 shares held by Hanrow Capital Fund Five, a
Minnesota limited partnership, 117,600 shares held by Hanrow Capital Fund, a
Minnesota limited partnership, and 175,000 shares held by Hanrow Financial
Group, Ltd. Also includes shares that Hanrow Financial Group, Ltd., Hanrow
Capital Fund Five, Hanrow Capital Fund X and Hanrow Business Finance have the
right to acquire pursuant to the terms of warrants issued to them. Does not
include 200,000 shares of convertible preferred stock held by Hanrow Financial
Group, Ltd. or shares which Hanrow Financial Group, Ltd. could receive upon
conversion of a Subordinated Convertible Promissory Note dated August 28, 1997.
Mr. Evans is President, Chief Executive Officer, director and a shareholder of
Hanrow Financial Group, Ltd., the general partner of Hanrow Capital Fund, Hanrow
Capital Fund Five and Hanrow Capital Fund X. Although Mr. Evans may be deemed
to be the beneficial owner of the foregoing shares, he disclaims voting and
dispositive powers over all of said shares.
(2) Includes 1,389,878 shares held by Hanrow Capital Fund Five, a
Minnesota limited partnership, 117,600 shares held by Hanrow Capital Fund, a
Minnesota limited partnership, and 175,000 shares held by Hanrow Financial
Group, Ltd. Also includes shares that Hanrow Financial Group, Ltd., Hanrow
Capital Fund Five, Hanrow Capital Fund X and Hanrow Business Finance have the
right to acquire pursuant to the terms of warrants issued to them. Does not
include 200,000 shares of convertible preferred stock held by Hanrow Financial
Group, Ltd. or shares which Hanrow Financial Group, Ltd. could receive upon
conversion of a Subordinated Convertible Promissory Note dated August 28, 1997.
Mr. Hanser is Chairman, director and a shareholder of Hanrow Financial Group,
Ltd., the general partner of Hanrow Capital Fund, Hanrow Capital Fund Five and
Hanrow Capital Fund X. Although Mr. Hanser may be deemed to be the beneficial
owner of the foregoing shares, he disclaims voting and dispositive powers over
all of said shares.
Also includes 60,000 shares held by the Custodian of Mr. Hanser's IRA
and 314,500 shares which would be issuable within 60 days if stock options
and/or warrants held by Mr. Hanser were exercised.
(3) Based on a Schedule 13D dated February 6, 1998, filed with Securities
and Exchange Commission by Perkins Capital Management, Inc. Perkins Capital
Management claims sole voting power over 162,500 of the shares and sole
dispositive power over all of the shares.
(4) Based on a Schedule 13D dated February 6, 1998, filed with Securities
and Exchange Commission by Richard W. Perkins. Mr. Perkins claims sole voting
power over 544,400 of the shares and sole dispositive power over all of the
shares. Includes 75,000 shares which would be issuable within 60 days if a
warrant held by Richard W. Perkins, as Trustee, were exercised. Does not
include shares which Richard W. Perkins, as Trustee, could receive upon
conversion of a Subordinated Convertible Promissory Note dated August 28, 1997.
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(5) Includes 60,000 shares owned by H. Leigh Severance, custodian
for Emily A. Severance, and 50,000 shares owned by the H.L. Severance, Inc.
Profit Sharing Plan and Trust. Also includes 132,000 shares which would be
issuable within 60 days if a warrant held by H. Leigh Severance were exercised,
30,000 shares which would be issuable within 60 days if a warrant held by H.
Leigh Severance, custodian for Emily A. Severance, were exercised, 6,000 shares
which would be issuable within 60 days if a warrant held by the H.L. Severance,
Inc. Pension Plan were exercised and 12,000 shares which would be issuable
within 60 days if a warrant held by the H.L. Severance, Inc. Profit Sharing Plan
and Trust were exercised. Does not include shares which the H.L. Severance,
Inc. Profit Sharing Plan and Trust and H. L. Severance, Inc. Pension Plan could
receive upon conversion of Subordinated Convertible Promissory Notes dated
August 28, 1997.
(6) Includes 2,929,903 shares which would be issuable within 60 days if
warrants held by Mr. Thomas were exercised.
(7) Each figure showing the percentage of outstanding shares owned
beneficially has been calculated by treating as outstanding and owned the shares
which would be issuable within 60 days if stock options and/or warrants held by
the indicated owner were exercised.
See "Hanrow Warrants," "Thomas Warrants" and "Subordinated Convertible
Promissory Notes."
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PROPOSAL TO APPROVE 1998 STOCK OPTION PLAN OF ASTROCOM CORPORATION
The Board of Directors has adopted the 1998 Stock Option Plan of Astrocom
Corporation as set forth in Exhibit A attached hereto, subject to shareholder
approval.
The 1998 Stock Option Plan (the "1998 Plan") allows the Company to grant
both incentive stock options within the provisions of Section 422 of the
Internal Revenue Code of 1986, and any amendments thereto, and options which do
not qualify as incentive stock options ("non-qualified options"). In the
opinion of the Board of Directors, the ability to grant options permits the
Company to recognize the contributions made to the Company by the Optionees and
provides them with an additional incentive to remain in the employ or on the
Board of Directors of the Company and its subsidiaries and to promote the
Company's best interest by providing them with an opportunity to acquire or
increase their proprietary interest in the Company. In addition, the ability to
grant options provides an additional inducement for the acquisition of the
services of persons capable of contributing to the future success of the Company
as employees, directors, consultants or independent contractors.
The principal terms of the 1998 Plan are as follows:
1. Administration. The 1998 Plan will be administered by the Stock
Option Committee ("Committee") of the Board of Directors of the Company. The
Committee will be comprised of the entire Board of Directors or, if the Board so
determines, by a committee of two or more "non-employee directors" as defined
under the Securities Exchange Act of 1934.
2. Eligibility. Incentive stock options may only be granted to any
full-time or part-time employee (which term includes, but is not limited to,
officers and directors who are also employees) of the Company or of its present
and future subsidiary corporations. Non-qualified options may be granted to
other persons, including, but not limited to, members of the Board of Directors,
consultants or independent contractors providing services to the Company or its
present and future subsidiary corporations. An individual who has been granted
an option may be granted an additional option or options under the 1998 Plan if
the Committee shall so determine, with the restriction that no individual
employee may receive incentive stock options which are exercisable for the first
time during any calendar year for shares having an aggregate fair market value
in excess of $100,000.
3. Grants to Directors. Each non-employee director of the Company shall
automatically be granted a non-qualified option under the 1998 Plan providing
for the purchase of 10,000 shares of the Company's stock at 100% of the fair
market value of such common stock on the date of his/her first election to the
Board, or on the date that an employee director of the Company becomes a
non-employee director of the Company.
Each non-employee director of the Company, serving as of the beginning of
each calendar year, shall automatically be granted a non-qualified option under
the 1998 Plan providing for the purchase of 20,000 shares of the Company's
common stock at 100% of the fair market value of such common stock on the date
of grant for his/her services to the Company during such year. Such
non-qualified option received by a non-employee director shall vest as to 1/12th
of the 20,000 shares of the Company's common stock at the end of each calendar
month during the year as long as the non-employee director has continued to
serve as a director of the Company. Each non-employee director of the Company
elected during a calendar year shall automatically be granted a non-qualified
option providing for the purchase of a pro rata portion of 20,000 shares, which
shall vest monthly during the balance of the calendar year.
<PAGE>
<PAGE>
4. Shares of Stock Subject to The 1998 Plan. The number of shares which
may be issued pursuant to the options granted by the Committee under the 1998
Plan shall not exceed 1,500,000 shares of the common voting stock of the
Company, subject to adjustment as provided in the 1998 Plan.
5. Option Agreement. Each option granted under the 1998 Plan shall be
evidenced by a written option agreement, which shall be subject to the
provisions of the 1998 Plan and to such other terms and conditions as the
Committee may deem appropriate.
6. Option Price. The option price for each share of common stock covered
by an incentive stock option shall be determined by the Committee, provided that
the price shall be at least 100% of the fair market value of the shares on the
date the option is granted or at least 110% of the fair market value of the
shares on the date the option is granted if the optionee owns more than 10% of
the total combined voting power of all classes of stock of the Company. The
purchase price of non-qualified options may be equal to, greater than or less
than the fair market value of the common stock on the date the option is
granted.
7. Payment. An optionee may pay for shares issuable upon exercise of an
option either (i) in United States dollars, in cash or by check, or (ii) if the
Board of Directors, in its sole discretion, shall so authorize, in shares of the
common stock of the Company then owned by the optionee. The Committee, in its
sole discretion, may permit the optionee to authorize a third party to sell
shares of the common stock acquired upon the exercise of the option and remit to
the Company a sufficient portion of the sale proceeds to pay the entire option
price and any tax withholding resulting from such exercise.
8. Terms and Exercise of Options. Each option granted under the 1998
Plan shall be exercisable during the periods and for the number of shares as
shall be provided in the option agreement evidencing the option granted by the
Committee and the terms thereof. In no event, however, shall any option be
exercisable by its terms after the expiration of ten years from the date of
grant, nor shall any incentive stock option granted to a person then owning more
than 10% of the total combined voting power of all classes of stock of the
Company be exercisable by its terms after the expiration of five years from the
date of grant.
9. Early Termination of Stock Options. Unless otherwise stated in the
option agreement, if an optionee shall cease to be employed by the Company, or
a subsidiary of the Company, for whatever reason and at whatever time, all
options held by the optionee shall be cancelled as of the date of such
termination of employment.
Unless otherwise stated in the option agreement, a non-qualified option
granted under the 1998 Plan will continue for its full term without early
termination.
10. Amendment and Termination. No options may be granted under the 1998
Plan after March 25, 2008, or earlier termination of the 1998 Plan as provided
therein. The Board may terminate the 1998 Plan or modify or amend the 1998 Plan
in such respect as it shall deem advisable, provided, however, that the Board
may not, without further approval within 12 months by the Company's
shareholders, (a) increase the maximum aggregate number of shares of common
stock as to which options may be granted under the 1998 Plan except as provided
therein, (b) change the provisions of the 1998 Plan regarding the option price,
(c) extend the period during which options may be granted, or (d) extend the
maximum period of ten years after the date of grant during which options may be
exercised. No termination or amendment of the 1998 Plan may, without the
consent of an individual to whom an option shall theretofore have been granted,
adversely affect the rights of such individual under such option. Further, the
1998 Plan may not, without the approval of the Company's shareholders, be
amended in any manner that will cause incentive stock options issued under it to
fail to meet the requirements of incentive stock options as defined in Section
422 of the Internal Revenue Code of 1986 or any amendments thereto.
An optionee who is granted a non-qualified option will not have income and
the Company will not be allowed a deduction at the time the option is granted.
When an optionee exercises a non-qualified option, the difference between the
option price and any higher market value of the stock on the date of exercise
will be ordinary income to the optionee and will be allowed as a deduction for
federal income tax purposes to the Company. The capital gain holding period of
the shares acquired will begin one day after the date the stock option is
exercised. When an optionee disposes of shares acquired by the exercise of the
option, any amount received that is more than the fair market value of the
shares on the exercise date will be treated as short-term or long-term capital
gain, depending upon the holding period of the shares. If the amount received
is less than the market value of the shares on the exercise date, the loss will
be treated as short-term or long-term capital loss, depending upon the holding
period of the shares.
An optionee who is granted an incentive stock option also will not have
income and the Company will not be allowed a deduction at the time the option is
granted. When an optionee exercises an incentive stock option, the optionee
will not recognize any ordinary income at that time. However, any excess of the
fair market value of the shares acquired by such exercise over the option price
will be an item of tax preference for purposes of any federal alternative
minimum tax applicable to individuals. If the shares acquired upon exercise are
disposed of more than two years after the date of grant and one year after the
date of transfer of the shares to the optionee (statutory holding periods), any
sale proceeds that are more than the total option price of these shares will be
long-term capital gain. Except in the event of death, if if the shares are
disposed of prior to the expiration of the statutory holding periods
(a "Disqualifying Disposition"), generally, the amount by which the fair market
value of the shares at the time of exercise is more than the total option price
will be ordinary income at the time of such Disqualifying Disposition. If a
Disqualifying Disposition occurs, the Company will be entitled to a federal tax
deduction for a similar amount.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE 1998 STOCK OPTION PLAN OF ASTROCOM
CORPORATION.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's outstanding stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. To the Company's knowledge,
during the fiscal year ended December 31, 1997, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were satisfied.
[TEXT]
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC AUDITORS
The firm of Ernst & Young LLP, Minneapolis, Minnesota, independent public
auditors, audited the books, records and accounts of the Company for the year
1997. A representative of Ernst & Young LLP will be present at the Annual
Meeting. The representative will have an opportunity to make a statement if he
or she desires to do so and will be available to respond to appropriate
questions from shareholders.
No auditors have been selected for the year 1998. It is anticipated that a
decision will be made by the Board of Directors in June 1998.
PAGE
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street N.W., Washington, D.C., and at the
Commission's Regional Offices at 75 Park Place, New York, New York and 230 South
Dearborn Street, Chicago, Illinois. Copies of such materials can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the next Annual
Meeting must be received by the Company, 2700 Summer Street N.E., Minneapolis,
Minnesota 55413, no later than December 23, 1998, in order to be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting.
OTHER MATTERS
At the date of this Proxy Statement, management knows of no other matters
which may come before this Annual Meeting. However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy to vote such proxies received by the Company in accordance
with their judgment on such matters.
By the Order of the Board of Directors,
Ronald B. Thomas
President and Chief
Executive Officer
April 24, 1998
[TEXT]
PAGE
<PAGE>
EXHIBIT "A"
1998 STOCK OPTION PLAN OF ASTROCOM CORPORATION
1. Purpose. The purpose of this 1998 Stock Option Plan (the "Plan") is
to encourage personnel of Astrocom Corporation (the "Company") to acquire a
proprietary interest in the Company, thereby creating an additional incentive to
such personnel to promote the Company's best interests and to continue in its
employ, and further to provide an additional inducement for the acquisition of
the services of persons capable of contributing to the future success of the
Company. Options granted under this Plan may be either "incentive stock
options" within the provisions of Section 422 of the Internal Revenue Code of
1986 and any amendments thereto, or options which do not qualify as incentive
stock options.
2. Administration.
A. This Plan shall be administered by the Stock Option Committee
(the "Committee") of the Board of Directors of the Company (the "Board"). The
Committee shall be comprised of the entire Board or, if the Board so determines,
of two or more "non-employee directors" as defined in Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934.
B. The Committee shall have full authority and discretion to
determine, consistent with the provisions of this Plan, the employees and others
to be granted options, the times at which options shall be granted, the option
price of the shares subject to each option (subject to Section 6), the number of
shares subject to each option (subject to Section 3), the period during which
each option becomes exercisable (subject to Section 7), and the terms to be set
forth in each option agreement. The Committee shall also have full authority
and discretion to adopt and revise such rules and procedures as it shall deem
necessary for the administration of this Plan.
C. The Committee's interpretation and construction of any provisions
of this Plan or any option granted hereunder shall be final, conclusive and
binding on the Company, the optionee and all other persons.
3. Eligibility.
A. The Committee shall from time to time determine the individuals
who shall be granted options under this Plan. Incentive stock options may only
be granted under this Plan to any full or part-time employee (which term
includes, but is not limited to, officers and directors who are also employees)
of the Company or of its present and future subsidiary corporations. Options
which do not qualify as incentive stock options may be granted under this Plan
to other persons designated by the Committee, including, but not limited to,
members of the Board of Directors, consultants or independent contractors
providing services to the Company or its present and future subsidiary
corporations. The term "subsidiary corporation" shall, for purposes of this
Plan, be defined in the same manner as such term is defined in Section 425(f) of
the Internal Revenue Code.
B. An individual who has been granted an option may be granted an
additional option or options under this Plan if the Committee shall so
determine, with the restriction that no individual employee may receive
incentive stock options (under this Plan and all incentive stock option plans of
the Company and its subsidiary corporations) which are exercisable for the first
time during any calendar year for shares having an aggregate Fair Market Value
(determined as of the time the option is granted) in excess of $100,000.
C. The granting of an option under this Plan shall not affect any
outstanding stock option previously granted to an optionee under this Plan or
any other plan of the Company.
[TEXT]
<PAGE>
D. (i) Each non-employee director of the Company shall
automatically be granted a non-qualified option under this Plan providing for
the purchase of 10,000 shares of the Company's Common Stock at 100% of the Fair
Market Value of such Common Stock on the date of his/her first election to the
Board (whether such election shall be by the shareholders or otherwise), or on
the date that an employee director of the Company becomes a non-employee
director of the Company.
(ii) Each non-employee director of the Company, serving as of the
beginning of each calendar year, shall automatically be granted a non-qualified
option under this Plan providing for the purchase of 20,000 shares of the
Company's Common Stock at 100% of the Fair Market Value of such Common Stock on
the date of grant for his/her services to the Company during such year. Such
non-qualified option received by a non-employee director shall vest as to 1/12th
of the 20,000 shares of the Company's Common Stock at the end of each calendar
month during such year, as long as such non-employee director has continued to
serve as a director of the Company. Each non-employee director of the Company
first elected after the beginning of any calendar year shall automatically be
granted, on the date of his/her election, a non-qualified option for the
purchase of a pro rata portion of 20,000 shares of the Company's Common Stock
based upon the remaining full calendar months of the year following his/her
election, which option shall be granted at 100% of the Fair Market Value of such
Common Stock on the date of grant and shall vest in equal portions at the end of
each calendar month during such calendar year, as long as such non-employee
director has continued to serve as a director of the Company.
(iii) The Board may from time to time amend Section 3.D.(i)
and/or Section 3.D.(ii) to increase or decrease the number of shares of Common
Stock that may be purchased pursuant to the options to be automatically granted
pursuant to such Sections.
4. Shares of Stock Subject to This Plan. The number of shares which may
be issued pursuant to the options granted by the Committee under this Plan shall
not exceed 1,500,000 shares of the common voting stock of the Company (the
"Common Stock"), subject to adjustment as provided in this Plan. Any shares
subject to an option which expires for any reason or is terminated unexercised
as to such shares may again be subject to an option under this Plan.
5. Issuance and Terms of Option Agreements. Each option granted under
this Plan shall be evidenced by a written Option Agreement, which shall be
subject to the provisions of this Plan and to such other terms and conditions as
the Committee may deem appropriate.
6. Option Price.
A. Each Option Agreement shall state the number of shares to which
it pertains and shall state the option price. The option price for each share
of Common Stock covered by an incentive stock option granted under this Plan
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date the option is granted; provided that if the employee, at the time the
option is granted, owns more than 10% of the total combined voting power of all
classes of stock of the Company, the option price shall not be less than 110% of
the Fair Market Value of the Common Stock on the date the option is granted.
The purchase price for options granted under this Plan which do not qualify as
incentive stock options may be equal to, greater than or less than the Fair
Market Value of the Common Stock on the date the option is granted. "Fair
Market Value," as used in this Plan, shall mean the value of the Common Stock on
a pertinent date as determined by the Committee, using such valuation methods as
it, in its sole discretion, shall deem appropriate.
<PAGE>
B. Upon the exercise of the option, the option price shall be
payable (i) in United States dollars, in cash or by check, or (ii) if the
Committee, in its sole discretion, shall so authorize, in shares of the Common
Stock of the Company then owned by the optionee, which shares shall be valued at
their Fair Market Value on the date of delivery. The Committee, in its sole
discretion, may permit the optionee to authorize a third party to sell shares of
the Common Stock (or a sufficient portion of the shares) acquired upon the
exercise of the option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire option price and any tax withholding resulting from
such exercise.
C. The proceeds of the sale of the Common Stock subject to option
shall be added to the general funds of the Company and used for its corporate
purposes.
7. Terms and Exercise of Options. Each option granted under this Plan
shall be exercisable during the periods and for the number of shares as shall be
provided in the Option Agreement evidencing the option granted by the Committee
and the terms thereof. In no event, however, shall any option be exercisable by
its terms after the expiration of ten years from the date of grant, nor shall
any incentive stock option granted to a person then owning more than 10% of the
total combined voting power of all classes of stock of the Company be
exercisable by its terms after the expiration of five years from the date of
grant.
8. Withholding Taxes.
A. The Company shall have the right to require the payment (through
withholding from the optionee's salary or otherwise) of any federal, state or
local taxes required by law to be withheld with respect to the issuance of
shares upon the exercise of an option or with respect to any disposition of such
shares by the optionee.
B. In order to assist an optionee in paying federal and state income
taxes required to be withheld upon the exercise of a non-qualified option
granted hereunder, the Committee in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the optionee to
elect to satisfy such income tax withholding obligation by having the Company
withhold a portion of the shares of Common Stock otherwise to be delivered upon
exercise of such option with a Fair Market Value equal to the taxes required to
be withheld.
9. Requirement of Law. The granting of options and the issuance of
shares of Common Stock upon the exercise of an option shall be subject to all
applicable laws, rules and regulations, and shares shall not be issued except
upon approval of proper government agencies or stock exchanges as may be
required. The exercise of any option will be contingent upon receipt from the
optionee of a representation in writing that at the time of such exercise it is
the optionee's intention to acquire the shares being purchased for investment
and not for resale or other distribution thereof to the public.
10. Non-Transferability. Except as otherwise provided by the Committee,
awards under this Plan are not transferable other than as designated by the
optionee by will or by the laws of descent and distribution, and then only as
provided in the Option Agreement.
11. Early Termination of Incentive Stock Options. Unless otherwise stated
in the Option Agreement, if an optionee shall cease to be employed by the
Company, or a subsidiary of the Company, for whatever reason and at whatever
time, all incentive stock options held by the optionee shall be cancelled as of
the date of such termination of employment.
12. Early Termination of Non-Qualified Options. Unless otherwise stated
in the Option Agreement, a non-qualified option granted under this Plan will
continue for its full term without early termination.
[TEXT]
<PAGE>
<PAGE>
13. Adjustments; Reorganization; Liquidation.
A. In the event of any change in the outstanding shares of Common
Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination or exchange of shares, or
other similar corporate change, then if the Board shall determine, in its sole
discretion, that such change necessarily or equitably requires an adjustment
in the number of shares subject to each outstanding option and the option
prices or in the maximum number of shares subject to this Plan, such adjustments
shall be made by the Board and shall be conclusive and binding for all purposes
of this Plan. No adjustment shall be made in connection with the issuance by
the Company of any warrants, rights or options to acquire additional shares of
Common Stock or of securities convertible into Common Stock.
B. If the Company shall become a party to any corporate merger,
consolidation, major acquisition of property for stock, sale of all or
substantially all of its common stock, reorganization or liquidation, the Board
shall have power to make any arrangement it deems advisable with respect to
outstanding options, which shall be binding for all purposes of this Plan,
including, but not limited to, the substitution of new options for any options
then outstanding, the assumption of any such options and the termination of any
such options.
C. Neither this Plan nor the grant of any option pursuant to this
Plan shall affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to dissolve, liquidate or sell or transfer all
or any part of its business or assets, or issue additional shares of Common
Stock or options.
14. Claim to Stock Option, Ownership or Employment Rights. No employee or
other person shall have any claim or right to be granted options under this
Plan. Prior to issuance of the stock, no optionee, his/her personal
representative, heirs or legatees shall be entitled to voting rights, dividends
or other rights of shareholders except as otherwise provided in this Plan.
Neither this Plan nor any action taken hereunder shall be construed as giving
any employee any right to be retained in the employ of the Company.
15. Expense of Plan. The expenses of administering this Plan shall be
borne by the Company.
16. Reliance on Reports. Each member of the Board shall be fully
justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company and upon any other information
furnished in connection with this Plan by any person or persons other than
himself. In no event shall any person who is or shall have been a member of the
Board be liable for any determination made or other action taken, or any
omission to act, in reliance upon any such report or information, or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
17. Indemnification. Each person who is or shall have been a member of
the Board shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim, action,
suit or proceeding to which he may be a party or in which he may be involved by
reason of any action taken or failure to act under this Plan and against and
from any and all amounts paid by such person in settlement thereof, with the
Company's approval, or paid by such person in satisfaction of a judgment in any
such action, suit or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person may be entitled under the Company's articles of incorporation
or bylaws, as a matter of law, or otherwise, or any power that the Company
may have to indemnify him or hold him harmless.
[TEXT]
<PAGE>
18. Amendment and Termination. No options may be granted under this Plan
after March 25, 2008, or earlier termination of this Plan as hereinafter
provided. The Board may terminate this Plan or modify or amend this Plan in
such respect as it shall deem advisable; provided, however, that the Board may
not, without further approval within 12 months by the Company's shareholders,
(a) increase the maximum aggregate number of shares of Common Stock as to which
options may be granted under this Plan except as provided in Section 13, (b)
change the provisions of this Plan regarding the option price, (c) extend the
period during which options may be granted, or (d) extend the maximum period
of ten years after the date of grant during which options may be exercised. No
termination or amendment of this Plan may, without the consent of an individual
to whom an option shall theretofore have been granted, adversely affect the
rights of such individual under such option. Further, this Plan may not,
without the approval of the Company's shareholders, be amended in any manner
that will cause incentive stock options issued under it to fail to meet the
requirements of incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986 or any amendments thereto.
19. Gender. Any masculine terminology used in this Plan shall also
include the feminine gender.
20. Effective Date. The effective date of this Plan is the date of its
adoption by the Board; provided, however, that it and any and all options
granted hereunder shall be and become null and void if the shareholders of the
Company shall fail to approve this Plan within 12 months from the date of its
adoption.
PAGE
<PAGE>
ASTROCOM CORPORATION
2700 Summer Street N.E.
Minneapolis, Minnesota 55413-2820
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies given by him or her for the
Annual Meeting of the Shareholders of Astrocom Corporation, to be held on May
28, 1998, at 3:00 p.m., Central Daylight Time, at the Minneapolis Club, 729
Second Avenue South, Minneapolis, Minnesota, hereby appoints S. Albert D. Hanser
and Ronald B. Thomas as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of Astrocom Corporation held of record by the
undersigned on April 10, 1998, at said Annual Meeting of the Shareholders to be
held on May 28, 1998, or any adjournment thereof.
1. ELECTION OF ONE CLASS II DIRECTOR FOR A TERM EXPIRING AT THE 2001 ANNUAL
MEETING.
NOMINEE FOR CLASS II DIRECTOR:Gary L. Deaner
Mark only one of the following two boxes:
___ VOTE FOR nominee listed above
___ VOTE WITHHELD as to nominee listed above
2. PROPOSAL TO APPROVE THE COMPANY'S 1998 STOCK OPTION PLAN.
___ FOR ___ AGAINST ___ ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1 AND PROPOSAL 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
_____________________________________________________
Signature
_____________________________________________________
Title (if any)
_____________________________________________________
Signature
_____________________________________________________
Title (if any)
Dated:
_________________________________________, 1998
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
